Turkey’s central bank on Thursday hiked interest rates by more than expected to 25%. The country signed an agreement with Hungary for its first natural gas export to a non-bordering European country. Norwegian Equinor ASA is exploring the sale of its operations in Azerbaijan, including a stake in the country’s largest oil project. Armenia's GDP growth in the second quarter of 2023 was 9.1% compared to the same period of 2022.
Here is a rundown of the latest economic and business developments around Georgia's neighboring Turkey, Azerbaijan and Armenia during the last week.
Turkey
Turkey’s central bank on Thursday hiked interest rates by more than expected to 25%, signaling it was willing to follow through on a new commitment to damp inflation through monetary policy. The main policy rate was previously at 17.5%. Economists expected a rise to 20%. The embattled Turkish lira rallied against the euro and U.S. dollar on the news. In a Thursday statement, the Turkish central bank committee said it “decided to continue the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior.”
Turkey signed an agreement for its first natural gas export to a non-bordering European country during the one-day visit of President Recep Tayyip Erdoğan and a delegation of ministers to Hungary. The natural gas shipments from Turkey to Hungary are expected to start next year. The agreement is said to include cooperation on the use of Turkey’s liquefied natural gas (LNG) infrastructure and natural gas storage facilities of the two countries within the framework of their common interests. The details of the export volume have not been included in the statement. Turkey in January had signed an agreement with Bulgaria for the transmission of up to 1.5 billion cubic meters (bcm) of natural gas a year under a 13-year deal.
Turkish construction firms undertook around $8.93 billion (around TL 242 billion) worth of projects abroad in the first seven months of this year. Despite the shifts in demand in the sector because of the ongoing Russia-Ukraine war, as Russia traditionally kept the strong demand over the past years, the sector undertook some 120 projects abroad in January-July. Regarding the projects conducted this year, the average value of projects was calculated as $74.4 million. The total value of the construction sector‘s projects undertaken abroad since 1972 has reached $482 billion. The companies have realized a total of 11,768 projects in 134 countries in the stated period, it was noted.
Turkey hosted 26.76 million foreign tourists in the first seven months of 2023. The number of foreign arrivals in January-July rose 16.22% on a yearly basis, the Culture and Tourism Ministry said. Istanbul, Turkey's largest city by population and a top tourist draw, welcomed 36.5% of all foreign visitors, or nearly 9.77 million, in the seven-month period. It was followed by the Mediterranean resort city of Antalya with 7.7 million foreign tourists and Edirne in northwestern Turkey, which borders both Bulgaria and Greece, with 2.7 million foreign visitors.
Turkey received foreign direct investments worth $4.8 billion in the first half of 2023. Some $2.5 billion of these investments were mergers, acquisitions or capital inflows. The EU countries' share in foreign direct investments during the first six-month period was at 56%. The Netherlands' share is 23%, Russia has 15%, the United Arab Emirates holds 13%, and Germany and Ireland have 7% each.
Turkey’s exports of furniture, paper and forestry products in the January-July period of 2023 have topped $4.58 billion according to the figures released by the Istanbul Furniture, Paper and Forest Products Exporters Association. The furniture, paper and forestry products sector, which set its export target at $10 billion this year, realized $609 million of foreign sales in July. The export of furniture, which carries the largest share in the sector, amounted to $343 million in July, while the total export volume of the sector from January through July totaled $2.61 billion. Turkey exported mostly to Iraq, Israel and the United Kingdom in the seven-month period.
Turkey aims to increase food and agriculture exports to $50 billion by 2028, president of the Turkish Exporters Assembly (TIM) said. According to Gültepe, the food and agriculture sector will play a critical role in Turkey's goal of reaching a $400 billion export target by 2028. “In 2022, we exported approximately $27 billion worth of food and agricultural products. For 2028, we aim to increase our food and agriculture exports to $50 billion. We are conducting all our projections and efforts in line with this goal,” Gültepe said.
The producer price index (PPI), which measures changes in the price of goods and services from a producer perspective, rose in Turkey by 15.34% in July. The index rose by 60.32% on an annual basis in July, while it soared by 45.66% compared to the reading from December last year. Looking at the annual changes among the industrial sectors, prices for mining and quarrying surged by 54.26% and those for manufacturing grew by 60.43%.
Azerbaijan
Norwegian Equinor ASA is exploring the sale of its operations in Azerbaijan, including a stake in the country’s largest oil project. The energy company is working with Jefferies Financial Group Inc. to gauge buyer interest in the assets, which includes a 7.27% interest in the large Azeri-Chirag-Gunashli field, the people said. A deal could value the assets at about $1 billion. Equinor has stakes in other exploration and development fields in the Caspian Sea, as well as in the Baku-Tbilisi-Ceyhan (BTC) oil export pipeline.
Azerbaijan's income from the operation of main pipelines in the first half of 2023 amounted to 1, 796, 588, 900 manats ($ 1,056,816,992 at the current exchange rate), which is 1.9% higher than the same period in 2022. In particular, income from the operation of main oil pipelines, including Baku-Tbilisi-Ceyhan (BTC), amounted to 535, 337, 200 manats ($314.9 million). Compared to January-June 2022, such revenues decreased by 12.5%. In the first half of 2023, losses in the main oil pipeline network amounted to 1.7 thousand tons against 1.3 thousand tons in the same period last year (an increase of 30.8%). Incomes from the operation of the main gas pipelines of Azerbaijan, including the South Caucasus Pipeline (Baku-Tbilisi-Erzurum), in January-June 2023 amounted to 1, 261, 251, 700 manats ($ 741.9 million), growth compared with the first half of last year by 9.5%. Losses in the network of main gas pipelines in the first half of 2023 amounted to 38 million cubic meters against the figure for the same period last year 24.8 million cubic meters (an increase of 53.2%).
In the first half of 2023, Azerbaijan exported 2, 825, 456, 034 kWh of electricity (e/e) in the amount of $314 376 013. Compared to the same period in 2022, exports increased 4.5 times in quantitative terms and 8.9 times in value terms. In the structure of exports, electricity supplies to Russia amounted to 64 923 089 kW / h (an increase of 52.4%) in the amount of $ 2 649 700, to Georgia - 1 361 128 600 kW / hour (an increase of 11.1 times) by $84 393 970 Turkey - 1 384 537 900 kWh (an increase of 3.5 times) by $226 910 080, Iran - 14 866 kW / h (down by 77.7%) for $ 422 380. Azerbaijan imported 63 522 040 kWh of electricity in January-June 2023 (an increase of 17.7% compared to the first half of 2022 in quantitative terms) by $2 041 210 (an increase of 3%).
Azerbaijan's banking sector made a net profit of 655.3 million manats ($385.47 million) in January-July of this year (+33%). During the seven months, banks' operating income amounted to 2.714 billion manats ($1.6 billion) (+27.35%), operating expenses to 1.749 billion manats ($1.03 billion) (+28.4%), loan loss provision made up 146.7 million manats ($86.29 million) (-9.45%), windfall gains stood at 0.4 million manats ($0.24 million) and profit tax payments accounted for 163.4 million manats ($96.12 million) (+43.2%).
Azerbaijan received 1,143,600 tourists from 183 countries in January-July 2023, 37.4% more than the previous year. Among the tourists, 32.8% came from Russia, 18.2% from Turkey, 7.4% from Iran, 4.9% from India, 4.7% from Georgia, 3.9% from Saudi Arabia, 2.4% from Kazakhstan, 2.3% from Pakistan, 2.1% from the UAE, 1.8% from Uzbekistan, 1.5% from each of Ukraine and Israel, 1.4% from Belarus, 1.3% from Kuwait, 1.2% from each of the UK and Turkmenistan, and 11.4% from other countries. Men constituted 70.5%, while women comprised 29.5% of the foreigners.
Overdue loans in Azerbaijan as of August 1, amounted to 494.7 million manats ($291.12 million), down 1.5% from a month earlier. The amount of problem loans in the country decreased by 16.7% compared to the beginning of the year, and by 25.3% in comparison to a year earlier. By the end of July this year, the share of overdue loans in the total loan portfolio was 2.2%. This figure was 2.3% at the end of June, 2.9% at the end of last year, and 3.5% at the end of June last year.
Armenia
Armenia's GDP growth in the second quarter of 2023 was 9.1% compared to the same period of 2022, according to the National Statistical Committee (NSC). In the first quarter of this year, GDP growth was 12.1%. In nominal terms, at the end of the second quarter the country’s GDP in current prices amounted to over 2.1 trillion drams ($5.5 billion). GDP per capita in market prices amounted to 716,830 drams, 1,852 US dollars and 1,701 euros.
Armenia’s foreign trade turnover in the first seven months of 2023 amounted to about $10.4 billion, which is 62.6% higher than in January-July 2022. In 2023 July alone, the foreign trade dropped by 2.4% from June of the same year, but compared to July 202 alone it was up 18.1%. Armenian exports in the first 7 months of 2023 soared by 62.1% year-on-year to over $3.8 billion. In July alone, compared to July last year, a 15.6% growth was recorded. Armenian imports during the reporting period totaled over $6.5 billion, recording a 63% increase compared to January-July 2022. In July of the current year, imports grew by 19.7% year-on-year.
The Armenian-Russian trade soared to $3.7 billion in the first seven months of 2023, Armenia’s Economy Minister Vahan Kerobyan said. He noted that Armenian exports to Russia amounted to $2 billion, while imports grew to $1.7 billion, 70% more than in the first seven months of 2022, when the trade between the countries doubled.
Armenia's economic activity in the first seven months of 2023 was up 10.4% as opposed to the same time span in 2022. The growth in July 2023 alone was up 7.6% from the previous month of June and up 6% when compared to July 2022. According to the official data, all sectors of economy, except for power generating facilities, reported growth.
The unemployment rate in Armenia in the first quarter of this year calculated by the methodology of the International Labor Organization was 13.7% of the labor force. The number of unemployed people registered with employment services of Armenia decreased by 16.0%.
Armenia's State Revenue Committee (SRC) said that there were 717,766 officially registered jobs in the country as of late July, 2023. All these jobs were income-generating. The figure was based on income tax and social benefit reports submitted by taxpayers. The number of officially registered jobs was by 41,422 or 6.1% more than in the same month a year earlier.
Consumer prices in Armenia grew by 3.6% year-on-year in the first seven months of 2023, according to the data of the National Statistical Committee. At the same time, in July 2023 compared to June 2023 a decline of 0.1% was registered, while compared to July of last year, the price decline was 0.1%.
Armenia’s capital Yerevan will host the World Tourism Investment Forum on September 6-8 in cooperation with the United Nations World Tourism Organization (UNWTO).
